Clear Channel in Deal to Sell 11 More Small-Market Stations
Clear Channel agreed to sell stations in 11 more markets, as it divests hundreds of properties in smaller cities to focus on urban areas that may have better growth prospects (CD Jan 22 p5). Brokers said the company’s deal to sell 52 stations points to a strong market for radio properties though many are on the block -- from Clear Channel and others. A strong market bodes well for Clear Channel efforts to divest all stations in designated market areas below the top 100, said a broker and an appraiser. They expect the sales to proceed despite investor uncertainty on whether shareholders will approve the company’s $26.7 billion takeover.
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Clear Channel agreed last week to sell the 52 stations in Tex., Okla. and La. to GAP Bcstg., said Karen Hines, gen. mgr. of the company’s Abilene cluster. The buyer doesn’t seem to have immediate plans to change the stations’ formats, said Hines, adding such alterations are “always a possibility.” GAP Bcstg. officials couldn’t be located to comment.
Clear Channel has deals to sell at least 128 small- market stations, according to our calculations. That represents 29% of the 448 properties it said Nov. 16 it would sell. That day, it unveiled the deal to be taken private by leveraged buyout firms Thomas Lee and Bain Capital. Investors will vote next week whether to accept the deal; some shareholders have called the price too low. Even if the deal craters, brokers expect the small-market station sales to continue. “I am of the impression that these are asset sales with no contingency based on what happens to the public stock of Clear Channel,” said radio appraiser David Schutz, “so I think they're going down.” Earlier deals include agreements to sell 76 radio stations in 17 markets (CD Jan 23 p5).
Radio station sales are likely remain brisk, fueled by interest in the sector among investors put off by sagging returns on stocks and other securities, broker Frank Kalil said: “When you have the kind of interest and you have the kind of money behind that interest, then that does make the market very good. Fungibles aren’t giving a return that is satisfactory to investors -- that is what has caused hedge funds’ acquisition of assets such as broadcast properties.” The latest Clear Channel deal “speaks to the viability of the market, and the continued optimism that the financial community has about broadcast radio,” Schutz said: “There’s a lot of inventory that’s out there and there’s a lot of capital, and the collective belief is the owners or sellers of stations and the entrepreneurs backed by capable capital sources will come together during the remainder of this calendar year.”